Crude economics

India needs deeper fiscal reforms

India’s macroeconomic outlook often changes, depending on the level of crude oil prices. As a large importer of energy, India does relatively well when oil prices are low and stable. A significant rise in crude oil prices increases policy challenges. It leads to a higher current account deficit and puts pressure on the currency, which needs careful management. Higher oil prices also result in higher inflation and increased stress on government finances. Crude oil prices have gone up by about 48 per cent since the beginning of the year. To contain inflation, the Union government last week decided to reduce